Systematic review of sustainable corporate governance of SMEs: Conceptualisation and propositions

Abstract

Recent global events and actions toward climate change have heightened the urgency of sustainability in all aspects of life. However, few studies exist on the incorporation of sustainability principles into the corporate governance practices of small and medium-sized enterprises (SMEs). This study aims to review the current state of the literature on the incorporation of sustainability principles in corporate governance practices of SMEs, validate the outcomes and set future research agenda. This research was conducted using a systematic literature review (SLR). Findings suggest female executives, board size, firm size, board diversity, board independence and ownership concentration are the dominant themes in sustainable corporate governance (SCG) of small businesses. Studies are predominately conducted in the European context with some studies in Asia and North America while studies in Africa and South America are limited. The study showed that corporate governance models of SMEs have excluded pertinent issues such as climate change, digitization, and racial equality. Although the study concentrated on limited but highly relevant literature, the results establish the basis for further studies and enhance debates on sustainable models for corporate governance practices of SMEs. Compared to existing studies, the outcomes of this study emphasise the need to prioritise sustainability-inspired research of SMEs and provide solutions to integrate sustainable practices in small businesses. The study offers a guiding framework for managers and policy makers to promote progressive and sustainable practices in managing SMEs.